Energy firms pump cash into Pennsylvania campaigns

October 16, 2012 4:00 AM

By Erich Schwartzel Pittsburgh Post-Gazette

For the billion-dollar companies writing the checks, the campaign contributions are little more than a rounding error.

Range Resources of Fort Worth, Texas, donated $3,000 to a Washington County commissioner running for state treasurer. Chesapeake Energy is headquartered in Oklahoma City but gave $1,000 to an auditor general candidate who has pledged, if elected, to investigate how Pennsylvania monitors shale drilling. And Chief E&D Holdings in Dallas sent a check for $1,000 to a Cumberland County man running for Pennsylvania attorney general.

They may be small amounts, but they make one thing clear: Some of the country's biggest energy companies are now getting involved in some of Pennsylvania's smaller races.

In the statewide races for attorney general, auditor general and state treasurer, gas drilling firms donated at least $16,250 to the Democratic and Republican candidates from January to September, according to a Post-Gazette analysis. When contributions from energy company-affiliated PACs and utility firms are taken into account, the amount of money given by the energy sector balloons to $80,750.

The analysis included direct company contributions as well as donations from lobbying firms and government relations organizations that represent drillers and other energy businesses.

Still, the full effect of the energy industry's influence in the 2012 cycle remains to be seen. Contributions given in the current cycle won't be reported until Oct. 26, with nearly two weeks left before the election.

Energy money in Pennsylvania politics isn't new; many of the Marcellus Shale drillers have been donating to legislators and gubernatorial candidates since they began extracting natural gas from the formation several years ago.

But the quiet introduction of industry funds into statewide races such as auditor general -- offices that operate independent of the governor and Harrisburg legislators -- signals an industry shift that experts say could lead to even smaller races getting bigger donors.

All the candidates are brushing up on shale issues -- the pervasiveness of the industry has brought new political offices into discussions over what role the state will play in regulating the development.

The attorney general could have a say in how the state responds to legal challenges to shale legislation. The next auditor general is expected to examine how state agencies monitor the booming industry. And while removed from the policy decisions related to the impact fees paid by gas drillers, it's the state treasurer whose signature is on each of the annual checks to municipalities.

The campaign money comes from various sources: through political action committees formed by companies, such as the Range Resources Energy Independence PAC, or through government-relations firms that take on Pennsylvania clients that include shale businesses operating here.

"You could call this a 'trickle-down effect' on fracking money," said James Browning, regional director of state operations at Common Cause, a nonpartisan organization that tracks money in politics. "They have won on a lot of the big issues and they're looking ahead to see how the auditor and the AG will pass judgment on what's happened."

Several municipalities are currently suing the state for control of zoning rights related to shale drilling, a case that will be argued before the state Supreme Court on Wednesday, and one that highlights the tension between local and state officials over who regulates the expanding industry.

If the local governments win back the ability to draft ordinances that regulate drilling activity, analysts say the state could see energy contributions trickle down even further to commissioner or school board races.

Backing the GOP

David Freed, district attorney of Cumberland County and the Republican candidate for attorney general, has received the most in energy-sector contributions -- nearly $70,000 so far.

Mr. Freed's campaign has received checks from Range Resources and its strategic partner, MarkWest Liberty, as well as donations from Chesapeake Energy, Chief E&D Holdings, Seneca Resources of Houston and Consol Energy of Cecil, Washington County.

"Dave is very clear in his position in the safe, clean expansion of shale, and the folks in the industry clearly like and are supportive of his position," campaign manager Tim Kelly said.

The campaign sees shale drilling as an issue that will come up for the next attorney general, "whether or not it's something that's productive and puts people back to work, or continues to be held up," Mr. Kelly said.

Donations also have come to Mr. Freed's campaign from government-relations firms that represent drilling firms and companies that do contract work with the industry.

Mr. Freed received an additional $2,000 from Aqua America, a Montgomery County-based water utility currently constructing pipelines across Pennsylvania to supply drillers with water.

The $2,000 is a tiny slice of the company PAC's annual budget of around $120,000, said Chris Franklin, chief operating officer.

The PAC board doesn't decide who receives donations based on a single issue, he said, but rather on a record of "keeping utilities healthy."

Shale drilling has become a divisive issue in the attorney general race, taking a place alongside pledges to fight cybercrime and child abuse. Mr. Freed's opponent, Democratic prosecutor Kathleen Kane of Lackawanna County, was recently criticized by the Pennsylvania Republican Party for saying she would "protect Pennsylvanians and our environment from the dangers of fracking" if elected.

Republican Party chairman Rob Gleason said the state "can't trust" Ms. Kane because of the comments. She has received no energy industry contributions in the general election race through the third reporting cycle and did not return requests for comment.

In other races, candidates from southwestern Pennsylvania have a home field advantage when courting shale donations.

Republican Diana Irey Vaughan has served for 17 years as a commissioner in Washington County, one of the state's epicenters of drilling activity. During her time as commissioner, she advocated for low tax rates in the county -- a move she says helped attract the industrial parks near Canonsburg now filled with shale firms.

She held her first campaign event at Consol Energy's headquarters, and has received two separate donations totaling $4,000 from the corporate PAC of Range Resources, which runs its Marcellus operations out of Ms. Vaughan's county.

A separate $1,000 donation came to Ms. Vaughan from the GGR Inc. PAC, which donates on behalf of the Gmerek Government Relations firm that has worked to expand natural gas business in the past.

The incumbent treasurer, Democrat Rob McCord, received $1,000 from PECO PAC, an arm of Peco Energy Co. that is owned by the Exelon utility company of Chicago. He did not return requests for comment.

In the race for auditor general, both major party candidates have pledged to examine the Department of Environmental Protection's system for tracking industry development.

Republican John Maher, who is currently a state representative in Upper St. Clair, wants to explore establishing a single system that would handle oversight for the life cycle of a well.

He hasn't heard from any energy companies on the plan, he said, but has received at least $4,000 in donations from them so far. The donors include the PAC for Greenlee Partners, a Harrisburg government affairs group that represents several energy firms, as well as Range Resources and Chesapeake Energy.

In a statement, Chesapeake Energy said, "Our political action committees seek to identify well-informed, principled leaders on matters of domestic energy policy and support their efforts to promote a strong, clean energy agenda with an emphasis on natural gas."

Mr. Maher, who has spent at least $75,000 out of his own pocket to fund the campaign, said donations like $500 from Range Resources don't matter when they're so dwarfed by his own donation.

"I do listen intently to my largest financial supporter, because it is me," he said.

His opponent, state Rep. Eugene DePasquale, D-York, issued a policy paper on his stance on shale drilling and said he wants to look into whether budget cuts at the DEP have led to fewer inspectors on the ground.

"I would order that audit on day one," he said.

Mr. DePasquale, who served in the DEP under Democratic Gov. Ed Rendell, has received at least $1,500 from energy interests so far and said that amount seemed reasonable for the auditor general contest.

"It tends not to be a big money race to begin with," he said.

Thinking small

The small amounts, though, are coming to races where a little bit goes a long way, said Mr. Browning at Common Cause.

"The threat of a little bit goes a long way, too, when people in these local races see how much is being spent," he said. If a candidate comes out against shale drilling, he said, "they're going to come up against some significant money."

Pennsylvania is one of 11 states that do not set limits on the amount of money a company PAC can contribute in a race, Mr. Browning said.

Local commissioner and school board elections will take place next year, and Mr. Browning said he anticipates energy industry donations hitting those smaller races if the state Supreme Court rules in favor of municipalities regulating the industry.

If the municipalities maintain zoning control, "you would almost enter this twilight zone where the local governments are more powerful and receive more money," he said.

And the money spent on state races this year?

It might not be much, but it could be an energy company's down payment on future governors and senators, he said.

"They're trying to play one or two moves ahead," Mr. Browning said. "It's no secret that these people think about running for higher office."